People Ex Rel. Weber Piano Co. v. . Wells

Cullen, Ch. J. It is somewhat a work of supererogation to add anything to what seems to me .the very clear opinion rendered by Judge Van Brunt, dissenting, in the court below. I think, however, that a few words in review of the prevailing opinion may not be out of place. • The learned Appellate Division held in People ex rel. Farmers' Loan and Trust Company v. Wells (94 App. Div. 463) that mortgages on a taxpayer’s real estate, the payment of which he had not assumed or become personally liable for, *64 were not debts and were not to be deducted from the amount of his personal property in assessing the latter for taxation. This decision we unanimously affirmed in October last. The relator has thus far succeeded in accomplishing the very thing condemned in the decision cited and this by a simple though ingenious process. Under the rule laid down in People ex rel. Union Trust Company v. Coleman (126 N. Y. 433) the amount of personalty upon which a corporation is liable under our law for taxation is determined by first ascertaining the total amount or value of its property and then subtracting therefrom the amount of its debts and other statutory deductions. One of those statutory deductions is the assessed value of its real estate.” The relator owned a piece of real estate worth two hundred and fifty thousand dollars, assessed at a hundred and fifty thousand dollars, on which there were mortgages amounting to two hundred thousand dollars. It has returned as its property only the value of the equity of redemption, fifty thousand dollars, while there has been deducted from the total value of the property of the corporation the whole assessed value of the real property as if it were. unincumbered. Of this the learned court below says: “ The legislature intended that the real and personal property of such a corporation should be assessed at its fair and true value, the same as the property of an individual, with the exception that it does not provide for a dediiction (of the amount of any mortgage upon his real estate unless he is liable for the indebtedness secured by the mortgage) from the individual’s personal property.” But there is not in the statutory provisions for the taxation of corporations and individuals any reference or mention whatever of such an exception. Therefore, the exception, if it exists, must result solely because of difference in the methods prescribed for taxing corporations and individuals and not because the legislature has directly enacted it. The statutory scheme prescribed by the legislature as construed by the courts directs that on one side of the account be placed the total property of the corporation ; on the other side, among other things, the value of its real estate. It seems *65 to me reasonably clear that nothing can be the real estate of the corporation unless it is at the same time its property. The learned counsel for the respondent cites authorities for the proposition that “ the mortgagor has, both in law and in equity, been regarded as the owner of the fee, and. the mortgage has been regarded as a mere chose in action, a mere security of a personal nature.” Assuming that this doctrine proves that the entire value of the piece of realty, regardless of the incumbrances upon it, was the real estate of the relator, and that it was entitled to deduction for its whole assessed value, I am at a loss to see why it does not equally prove that such entire value is to be taken as one of the relator’s assets. If, however, the relator’s property right in the realty is to be treated only as comprehending the equity of redemption in the real estate, the deduction for assessed value could only include an assessment on that interest. This is in accordance with the rule adopted by us in other cases which, though not identical with the present one and, therefore, controlling, are at least very analogous to it. In People ex rel. Van Nest v. Commissioners of Taxes (80 N. Y. 573) a bank having a lease of a vacant plot of ground for a long term of years, with the privilege of renewal, constructed a building thereon. By the lease the lessee agreed to pay in addition to the reserved rent all taxes and assessments imposed on the property. It was held that the bank was entitled to a deduction only for the assesed value of its building, not for that of the whole property. It seems to me the fair deduction from the case is that where there are different estates in the same piece of realty a corporation is entitled to deduct only the assessed valuation of that particular estate which it owns. Therefore, if the estate of the relator was confined to the. equity of redemption it follows it was only the assessed value of the equity o£ redemption that it was entitled to deduct. It may be that the proper way in which the relator should have been assessed was to treat it as holding the entire ownership of the realty and to deduct from its assets the whole assessed value. But as such a method would have finer eased *66 the amount of the relator’s liability it has no good ground for Complaint against the one adopted in the present case, and it is not necessary that we should determine which method is correct. The orders of the Appellate Division and the Special Term should be reversed, with costs, and the proceedings of the appellants confirmed.